Embracing Digitization and Automation in Financial Services
Financial Services Firms Need to Embrace Digitization and Automation to Succeed
From financial advice to customer onboarding to compliance, the financial services sector is increasingly becoming more digital and automated. As a result, financial services firms can become significantly more efficient, while potentially boosting customer and employee experience. These changes are not limited in scope, as they are already making an impact from the front office all the way through the back office. In fact, 90% of respondents to a Deloitte survey said that digital technologies are disrupting the financial industry.
“In the front office, we see developments like robo advisors automating wealth management, neobanks and digital lenders automating banking, and insurtech transforming insurance. The front office changes are driven by overall platform shifts, which have transitioned from the web to mobile apps, and from mobile apps to chatbots and voice interfaces,” says Lex Sokolin, futurist, entrepreneur, and global director of fintech strategy at financial sector research firm Autonomous Research.
“In the middle office, automation is hitting compliance through RegTech. As data becomes structured and accessed programmatically through APIs, increasingly more processes will be performed by rules-based and artificial intelligence-driven systems. In the very back office, artificial intelligence and Blockchain shine for automating validation and record-keeping of transactions, payments, and assets.”
Adapting to Modern Finance
Although these changes are underway in a widespread manner, not everyone is running at the same pace. Less than half of financial services professionals think they are preparing enough for digital disruption, finds Deloitte. Those that are confident in their firms’ digital adoption tend to be part of companies with a collaborative, agile culture that supports these changes.
“When people spend an average of 9 hours a day consuming media through technology, financial services have no choice but to be distributed and serviced on those very same platforms. If a firm seeks to build enterprise value that persists across generations, quickly adopting modern channels is a necessary strategy,” says Sokolin. For those organizations that are trying to resist change, however, history shows that in other industries, pushing back against digitization has not been successful. “The music, video and newspaper industries tried to resist change and digitization,” notes Sokolin. “Despite massive industry efforts in those cases, today’s media revenues are primarily tied to digital products.”
Firms that do not adapt will fall behind competitors who provide customers what they want. And on the more positive side. Considering the time saved on labor and reduced error, automation offers significant cost saving opportunities. So those financial services firms that embrace digitization and automation increase their likelihood to succeed.
“In the long term, financial firms that are able to deliver a legitimate technological advantage and build a digital-first business will experience winner-take-all dynamics that are endemic to software companies. But that requires a mind-shift,” says Sokolin.
This shift includes training and hiring employees that can work alongside new technologies like AI to unlock more value. Firms need to build “a talent pool that is tech-native and intuitively understands AI, voice, augmented reality and social media,” adds Sokolin. “This requires a changing of culture within the financial services industry in order to work with the next generations not just as customers, but as employees, investors, and board members.”
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